LONDON, April 26 (Reuters) - Improved income at its investment bank helped Barclays report a better than expected first quarter pretax profit of 1.7 billion pounds ($2.4 billion) on Thursday, although fines and legal costs from historic misconduct issues led to a statutory loss.

Barclays took a 1.4 billion pound hit from its settlement with the U.S. Justice Department over the sale of toxic mortgage-backed securities in the run-up to the 2007 financial crisis, and a further 400 million pound hit to cover claims against mis-selling of payment insurance products in Britain.

The underlying profit was better than the average analyst estimate of 1.63 billion pounds.

The bank reported a common equity tier 1 ratio, a closely watched measure of financial strength, of 12.7 percent, down from 13.3 percent in February as its reserves took the hit from the U.S. fine.